Finland’s payment landscape in a snapshot: A pioneer in the digitalisa...

Finland’s payment landscape in a snapshot: A pioneer in the digitalisation of payments

Finland barely uses direct debits (it represents 0.12% of total transactions, against an average of 21.3% in the European Union). Why did Finland decide to move away from this instrument when the country migrated to
?

E-invoicing combined with credit transfers was introduced to the Finnish market several years before
migration. The relatively few domestic direct debits (4% of all payments) were migrated to e-invoicing because it was considered a more advanced, flexible process combining invoicing and payments, and because creditors were not interested in investing in both e-invoicing and
Direct Debit. Despite the popularity of e-invoicing, however, Finnish consumers and businesses do also use
Direct Debit.

The other distinctive feature of the Finnish payment landscape is the wide use of cards (243 card transactions are carried out, on average, per year per person, against 93 across the
) and of credit transfers (158 are carried out, on average, per year per person in Finland, against 53 across the
). Are these two methods of payment the Finnish answer to diminishing cash payments? More generally speaking, what is the state of play regarding the decrease of cash-use in Finland, and what are the next steps Finland plans to take to further reduce it?

In Finland, debit cards are found in almost every pocket. Cards are widely accepted and there are no minimum payment thresholds for card payments. They are therefore used for all types of purchases with contactless payments becoming more and more frequent. This has led to many consumers no longer needing to keep cash in their wallets. All this, combined with 98% of consumers using online banking and e-invoicing for bill payments, has played a key role in reducing the use of cash as a payment method in Finland - the introduction of instant payments is estimated to reduce this even further.

Speaking of instant payments, how do you foresee the take-up of the
’s new
Instant Credit Transfer scheme rolling out in your country, once it enters into force in November 2017?

Several banks in Finland have committed to participating in the development of the
Clearing instant payment platform. Many of them have set a target to pilot the system in 2017, subject to managing the changes in their internal systems and operations in this tight time schedule.

Finland is a pioneer country in electronic invoicing. Is it popular in both Business-to-Business (B2B) and Business-to-Consumer segments? What are the next steps to increase the use of e-invoicing?

E-invoicing is popular in both segments in Finland. Two thirds of consumers receive e-invoices through their online bank (typically for electricity, phone bills, etc.). In the B2B segment almost 80% of all invoices are electronic.

When a consumer accepts a payment proposition based on the e-invoice, a credit transfer is sent from their account. The consumer may also instruct their bank to automatically send a credit transfer for a specified e-invoice up to a certain amount, but most customers want to keep control over the transaction by accepting e-invoices separately for a payment.

The next steps are to further improve the quality and processes for e-invoicing, e.g. in B2B to enhance automation by extracting
information from an e-invoice for tax reporting purposes.

To discover more about the Finnish payment landscape view our infographic:

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In this article

When it comes to innovative payment habits in Europe, Finland is a country that naturally springs to mind, and rightly so. The pioneering nature of its payments landscape makes it an ideal contender to feature in our ‘country profile’ section. As you will discover in our infographic below, the Finns are fond of digital payments: they make almost twice as many cashless transactions than the average
citizen (per capita), and more than 60% of these are made by card. We asked Päivi Pelkonen, Markets Director at the Federation of Finnish Financial Services, and member of the
Board, to tell us more about her country’s habits when it comes to payments, among which e-invoicing is increasingly prevailing. As there is a long-term ambition across the world to reduce cash and paper invoices, many lessons could be learned from the Finnish experience.